Valens Equity Weekly Insights - 2022 08 02
Hillenbrand, Inc. (HI) has pivoted successfully to roll-up the industrial machinery industry in the past decade, giving the business greater growth potential and opportunities for asset efficiency. Uniform Accounting highlights these efficiency improvements that the market is missing, indicating equity upside.Over the last decade, Hillenbrand has expanded its business from a casket business into the industrial machinery industry, causing Uniform ROA to improve to stable 25%-28% levels. It has acquired its way into industrial machinery, and while the market appears concerned about its recent Milacron acquisition, its largest to date, up to this point it has shown a strong ability to integrate acquisitions, the Milacron integration process is going well, and returns have remained solid.
Hillenbrand's management is closely aligned to focus on economic value added, which
along with its other metrics focus the team on both margins and asset turnover, the two
drivers of Uniform ROA.
In the Q2 (5/10) earnings call, management was confident about its organic offerings, its
margin performance, and its strategic investments. These suggest management is executing on its strategy.
Capital One Financial (COF) is being removed from the Conviction Long List. The company
is seeing macro headwinds from rising competition and economic pressure on its lenders.
We are closing it up 40%.
HI
Hillenbrand is a global industrial company with several brands that serve a variety of industries. The company's segments are: Process Equipment Group, which designs, engineers, manufactures, markets, and services process and material handling equipment and systems for a variety of industries, including plastics, food and pharmaceuticals, chemicals, fertilizers, minerals and mining, energy, wastewater treatment, forest products, and other general industrials; and Batesville?, which is engaged in the death care industry in North America, where it designs, manufactures, distributes, and sells funeral service products and solutions to funeral directors operating funeral homes.
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